Income Tax Amendments Act, 2000 (S.C. 2001, c. 17)

• Marginal note:Employee options

  (d) an amount equal to 1/2 of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of a security that a particular qualifying person has agreed after February 15, 1984 to sell or issue under an agreement, or in respect of the transfer or other disposition of rights under the agreement, if

• (ii) where rights under the agreement were not acquired by the taxpayer as a result of a disposition of rights to which subsection 7(1.4) applied,

  • (A) the amount payable by the taxpayer to acquire the security under the agreement is not less than the amount by which

    • (I) the fair market value of the security at the time the agreement was made

    exceeds

    • (II) the amount, if any, paid by the taxpayer to acquire the right to acquire the security, and

  • (B) at the time immediately after the agreement was made, the taxpayer was dealing at arm’s length with

    • (I) the particular qualifying person,

    • (II) each other qualifying person that, at the time, was an employer of the taxpayer and was not dealing at arm’s length with the particular qualifying person, and

    • (III) the qualifying person of which the taxpayer had, under the agreement, a right to acquire a security, and

• (iii) where rights under the agreement were acquired by the taxpayer as a result of one or more dispositions to which subsection 7(1.4) applied,

  • (A) the amount payable by the taxpayer to acquire the security under the agreement is not less than the amount that was included, in respect of the security, in the amount determined under subparagraph 7(1.4)(c)(ii) with respect to the most recent of those dispositions,

  • (B) at the time immediately after the agreement the rights under which were the subject of the first of those dispositions (in this subparagraph referred to as the “original agreement”) was made, the taxpayer was dealing at arm’s length with

    • (I) the qualifying person that made the original agreement,

    • (II) each other qualifying person that, at the time, was an employer of the taxpayer and was not dealing at arm’s length with the qualifying person that made the original agreement, and

    • (III) the qualifying person of which the taxpayer had, under the original agreement, a right to acquire a security,

  • (C) the amount that was included, in respect of each particular security that the taxpayer had a right to acquire under the original agreement, in the amount determined under subparagraph 7(1.4)(c)(iv) with respect to the first of those dispositions was not less than the amount by which

    • (I) the fair market value of the particular security at the time the original agreement was made

    exceeded

    • (II) the amount, if any, paid by the taxpayer to acquire the right to acquire the security, and

  • (D) for the purpose of determining if the condition in paragraph 7(1.4)(c) was satisfied with respect to each of the particular dispositions following the first of those dispositions,

    • (I) the amount that was included, in respect of each particular security that could be acquired under the agreement the rights under which were the subject of the particular disposition, in the amount determined under subparagraph 7(1.4)(c)(iv) with respect to the particular disposition

    was not less than

    • (II) the amount that was included, in respect of the particular security, in the amount determined under subparagraph 7(1.4)(c)(ii) with respect to the last of those dispositions preceding the particular disposition;

• Marginal note:Charitable donation of employee option securities

  (d.01) subject to subsection (2.1), where the taxpayer disposes of a security acquired in the year by the taxpayer under an agreement referred to in subsection 7(1) by making a gift of the security to a qualified donee (other than a private foundation), an amount in respect of the disposition of the security equal to 1/4 of the lesser of the benefit deemed by paragraph 7(1)(a) to have been received by the taxpayer in the year in respect of the acquisition of the security and the amount that would have been that benefit had the value of the security at the time of its acquisition by the taxpayer been equal to the value of the security at the time of the disposition, if

  • (i) the security is a security described in subparagraph 38(a.1)(i),

  • (ii) the taxpayer acquired the security after February 27, 2000 and before 2002,

  • (iii) the gift is made in the year and on or before the day that is 30 days after the day on which the taxpayer acquired the security, and

  • (iv) the taxpayer is entitled to a deduction under paragraph (d) in respect of the acquisition of the security;

• Marginal note:Determination of amounts relating to employee security options

  (1.5) For the purpose of paragraph (1)(d),

  • (a) the amount payable by a taxpayer to acquire a security under an agreement referred to in subsection 7(1) shall be determined without reference to any change in the value of a currency of a country other than Canada, relative to Canadian currency, occurring after the agreement was made;

  • (b) the fair market value of a security at the time an agreement in respect of the security was made shall be determined on the assumption that all specified events associated with the security that occurred after the agreement was made and before the sale or issue of the security or the disposition of the taxpayer’s rights under the agreement in respect of the security, as the case may be, had occurred immediately before the agreement was made; and

  • (c) in determining the amount that was included, in respect of a security that a qualifying person has agreed to sell or issue to a taxpayer, in the amount determined under subparagraph 7(1.4)(c)(ii) for the purpose of determining if the condition in paragraph 7(1.4)(c) was satisfied with respect to a particular disposition, an assumption shall be made that all specified events associated with the security that occurred after the particular disposition and before the sale or issue of the security or the taxpayer’s subsequent disposition of rights under the agreement in respect of the security, as the case may be, had occurred immediately before the particular disposition.

• Meaning of “specified event”

  (1.6) For the purpose of subsection (1.5), a specified event associated with a security is

  • (a) where the security is a share of the capital stock of a corporation,

    • (i) a subdivision or consolidation of shares of the capital stock of the corporation,

    • (ii) a reorganization of share capital of the corporation, and

    • (iii) a stock dividend of the corporation; and

  • (b) where the security is a unit of a mutual fund trust,

    • (i) a subdivision or consolidation of the units of the trust, and

    • (ii) an issuance of units of the trust as payment, or in satisfaction of a person’s right to enforce payment, out of the trust’s income (determined before the application of subsection 104(6)) or out of the trust’s capital gains.

• Marginal note:Definitions in subsection 7(7)

  (1.7) The definitions in subsection 7(7) apply for the purposes of subsections (1.5) and (1.6).

• Marginal note:Charitable donation — proceeds of disposition of employee option securities

  (2.1) Where a taxpayer, in exercising a right to acquire a security that a particular qualifying person has agreed to sell or issue to the taxpayer under an agreement referred to in subsection 7(1), directs a broker or dealer appointed or approved by the particular qualifying person (or by a qualifying person that does not deal at arm’s length with the particular qualifying person) to immediately dispose of the security and pay all or a portion of the proceeds of disposition of the security to a qualified donee,

  • (a) if the payment is a gift, the taxpayer is deemed, for the purpose of paragraph (1)(d.01), to have disposed of the security by making a gift of the security to the qualified donee at the time the payment is made; and

  • (b) the amount deductible under paragraph (1)(d.01) by the taxpayer in respect of the disposition of the security is the amount determined by the formula

    A × B / C

    where

    A 

    is the amount that would be deductible under paragraph (1)(d.01) in respect of the disposition of the security if this subsection were read without reference to this paragraph,

    B 

    is the amount of the payment, and

    C 

    is the amount of the proceeds of disposition of the security.

• Marginal note:Ecological gifts

  (d) the total of all amounts each of which is the fair market value of a gift of land, including a servitude for the use and benefit of a dominant land, a covenant or an easement, the fair market value of which is certified by the Minister of the Environment and that is certified by that Minister, or by a person designated by that Minister, to be ecologically sensitive land, the conservation and protection of which is, in the opinion of that Minister, or that person, important to the preservation of Canada’s environmental heritage, which gift was made by the corporation in the year or in any of the five preceding taxation years to

• Marginal note:Proof of gift

  (2) A gift shall not be included for the purpose of determining a deduction under subsection (1) unless the making of the gift is proven by filing with the Minister

  • (a) a receipt for the gift that contains prescribed information;

  • (b) in the case of a gift described in paragraph (1)(c), the certificate issued under subsection 33(1) of the Cultural Property Export and Import Act; and

  • (c) in the case of a gift described in paragraph (1)(d), both certificates referred to in that paragraph.

such amount, not greater than the fair market value otherwise determined and not less than the adjusted cost base to the corporation of the property at that time, as the corporation designates in its return of income under section 150 for the year in which the gift is made is, if the making of the gift is proven by filing with the Minister a receipt containing prescribed information, deemed to be its proceeds of disposition of the property and, for the purposes of subsection (1), the fair market value of the gift made by the corporation.

• Marginal note:Ecological gifts

  (5) For the purposes of applying subparagraph 69(1)(b)(ii), section 207.31 and this section in respect of a gift described in paragraph (1)(d) that is made by a taxpayer and that is a servitude, covenant or easement to which land is subject, the greater of

  • (a) the fair market value otherwise determined of the gift, and

  • (b) the amount by which the fair market value of the land is reduced as a result of the making of the gift

  is deemed to be the fair market value (or, for the purpose of subsection (3), the fair market value otherwise determined) of the gift at the time the gift was made and, subject to subsection (3), to be the taxpayer’s proceeds of disposition of the gift.

• Marginal note:Ecological gifts

  (5) For the purposes of applying subparagraph 69(1)(b)(ii), this section and section 207.31 in respect of a gift described in paragraph (1)(d) that is made by a taxpayer, the amount that is the fair market value (or, for the purpose of subsection (3), the fair market value otherwise determined) of the gift at the time the gift was made and, subject to subsection (3), the taxpayer’s proceeds of disposition of the gift, is deemed to be the amount determined by the Minister of the Environment to be

  • (a) where the gift is land, the fair market value of the gift; or

  • (b) where the gift is a servitude, covenant or easement to which land is subject, the greater of

    • (i) the fair market value otherwise determined of the gift, and

    • (ii) the amount by which the fair market value of the land is reduced as a result of the making of the gift.